Hiring surges in January as Americans flood into the job market

Hiring jumped last month as U.S. employers added a robust 225,000 jobs, bolstering an economy that faces threats from China’s viral outbreak, an ongoing trade war and struggles at Boeing Co.

The Labor Department also said Friday that half a million people streamed into the job market in January, though not all of them found jobs. That influx meant more people were counted as unemployed, which boosted the jobless rate to 3.6% from a half-century low of 3.5% in December.

The government’s monthly jobs report signaled that businesses remain confident enough to keep hiring, with the pace of job growth accelerating compared with a year earlier. Solid consumer spending offset drags from the trade war and declining business investment.

The job gains also give President Trump more evidence for his argument that the economy is flourishing under his watch. The Democratic contenders vying to oppose him have embraced a counterargument: that the economy’s gains are disproportionately benefiting wealthier Americans.

Economists cautioned that a large chunk of January’s job growth reflected temporary increases stemming from unseasonably warm weather. Construction firms, hotels and restaurants, which benefit from better outdoor conditions, accounted for about one-third of last month’s gains.

Still, taken as a whole, the job growth reported Friday reflects an economy that shows continued strength 11-plus years into a record-long expansion.

“While favorable weather conditions likely flattered the headline figures in today’s employment report, the key takeaway is that jobs growth continues to run at a solid pace,” said Neil Dutta, head of economics at Renaissance Macro Research.

January’s jobs report doesn’t appear to reflect any economic damage from the coronavirus, which has sickened thousands of people in China, closed stores and factories there and led many international businesses to suspend operations involving China. The virus’ effects probably came too late in the month to affect this batch of data.

Meanwhile, Boeing’s decision to halt production of its troubled 737 Max airplane also didn’t appear to have much effect on last month’s hiring. But the repercussions could begin to restrain job growth in the coming months.

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Despite the brisk pace of hiring in January, hourly pay is up just 3.1% from a year earlier — below a peak of 3.5% last summer, though still above the inflation rate.

The public’s confidence that jobs are plentiful is helping persuade more people outside the workforce to begin looking for employment. The proportion of Americans either with jobs or actively looking for one rose to 63.4%, the highest since June 2013.

Friday’s report also included, for the first time, data on same-sex couples who were included in broader figures on married people. January’s overall unemployment rate for married men was 1.7%; for married women, 2.1%.

With fewer unemployed people to choose from, many companies are having to make more of an effort to fill jobs. Tracy Graziani, who owns Graziani Multimedia with her husband, Lou, says she has struggled to find workers with web developer skills in her town of Mansfield, Ohio, which has a population of 47,000 and is an hour from Cleveland and Columbus.

So the couple decided to develop their own web specialist, hiring a college student part time and training him. With their business growing, they have little choice, they said. A strong economy typically enables more companies to train their workers.

“We hope when he graduates, he’ll stay on with us,” Graziani said, though many college graduates move away.

Friday’s employment report included the government’s annual revisions of estimated job growth. The revisions showed that in 2018 and early last year, hiring was slower than previously estimated. Employers added 2.3 million jobs in 2018, down from a previous estimate of 2.7 million.

That total gives Trump slightly less to boast about. Job growth in 2018 had previously topped 2016’s total. But the revised figures indicate that hiring in each of the first three years of Trump’s tenure trails the pace in the final three years of the Obama presidency.

The revisions also lowered February 2019’s job gain from 56,000 to just 1,000. That revision barely maintained the record-long streak of hiring that began after the Great Recession and has now reached 112 months.

The report may help keep the Federal Reserve on the sidelines in the coming months. With wage growth moderate, companies will face less pressure to raise wages. That should keep inflation in check.

Factory hiring, however, will probably be slowed in coming months by Boeing’s decision to suspend production of the 737 Max. One Boeing supplier, Spirit Aerosystems, has said it will cut 2,800 jobs. Those layoffs occurred after the government’s survey for the January jobs report and are likely to affect the hiring figures released next month.

Manufacturers shed jobs in January for the third time in four months. Their payrolls shrank by 12,000 positions, mostly because of layoffs in auto plants. Companies as a whole have cut back sharply on their spending on plants and equipment, in part because of Trump’s trade conflicts. That pullback in spending may continue to hamper manufacturers.

In the meantime, consumers remain confident about the economy and are spending steadily, benefiting such industries as restaurants, hotels and healthcare. A category that mostly includes hotels and restaurants grew by a robust 36,000 jobs. Healthcare providers added more than 47,000.

All told, economists have forecast that the economy will expand at a roughly 2% annual rate in the first three months of this year, about the same as its 2.1% annual growth in the final three months of last year.